Skip to main content
  • Research Article
  • Published:

The impact of corporate governance on financial control

Evidence from Chinese listed companies in the manufacturing industry


This study explores the impact of corporate governance on financial control by studying manufacture industry. Results show that factors such as the percentage of shares held by the controlling shareholder, independent directors system, and the degree of activeness of the board of directors all have marked influences on financial control. Suggestions for financial management improvement are also discussed.


以代理理论为指导,运用我国制造业上市公司调查数据和公开数据,考察了公司治理对财务控制的影响。 实证研究发现,第一大股东持股比例、 独立董事制度、 董事会活跃程度等因素对财务控制效果有显著影响,据此提出相关建议。


  • Beasley M(1996) An empirical analysis of the relation between the board of director composition and financial statement fraud. The Accounting Review, 71: 443–465

    Google Scholar 

  • Biao Xie, Davidson W N, Dalt P J(2003). Earnings management and corporate governance: The role of the board and the audit committee. Journal of Corporate Finance, (9): 295–316

  • Chen G M, Firth M, Gao D N, Rui O M(2005). Ownership structure, corporate governance,and fraud: Evidence from China. Journal of Corporate Finance, 12: 424–448

    Article  Google Scholar 

  • Chen Wenbin, Chen Xiaoyue(2005). Large shareholder agency problem and the use of IPO proceeds. Nankai Business Review, (3): 4–8 (in Chinese)

  • Cheng Xinsheng(2003). Corporate governance and accounting control. Accounting Research, (2): 42–46 (in Chinese)

  • Claessens S, Djankov S, Lang L H P(2000). The separation of ownership and control in East Asian corporations. Journal of Financial Economics, 58: 81–112

    Article  Google Scholar 

  • COSO(1994, 2003). Enterprise Risk Management. New York: COSO,

  • Diane Del G, Dann L Y, Partch M M(2003). Governance and boards of directors in closed-end investment companies. Journal of Financial Economics, 69: 111–152

    Article  Google Scholar 

  • Faccio M, Lang L H P(2002). The ultimate ownership of Western European corporations. Journal of Financial Economics, 65: 365–395

    Article  Google Scholar 

  • Fama E(1980). Agency problem and the theory of the firm. Journal of Political Economy, 88: 287–306

    Google Scholar 

  • Hart O(1995). Corporate governance: Some theory and implications. The Economic Journal, 105: 678–689

    Google Scholar 

  • Jensen M C, Warner J B(1988). The distribution of power: Among corporate managers, shareholders, and directors. Journal of Financial Economics, 20: 3–24

    Article  Google Scholar 

  • Jensen M, Meckling W(1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 39: 1021–1039

    Google Scholar 

  • La Porta R, Lopez-de-Silanes F, Shleifer A(1999). Corporate ownership around the world. Journal of Finance, 54: 471–518

    Article  Google Scholar 

  • Li Changqing, Lai juanqing(2004). Empirical research on the effectiveness of board of directors of China listed companies. Shanghai Security Research, (3): 40–51

  • Li Wei’an, Tang Yuejun(2004). An evaluation of corporate governance evaluation, governance index and performance: Evidence from Chinese listed companies in 2003. Management World, (2): 63–74 (in Chinese)

  • Pagano M, Roell A(1998). The choice of stock ownership structure: Agency costs, monitoring, and the decision to go public. Quarterly Journal of Economics, 113: 187–225

    Article  Google Scholar 

  • Paul Dunn(2004). The impact of insider power on fraudulent financial reporting. Journal of Management, 30(3): 397–412

    Google Scholar 

  • Shleifer A, Vishny R(1997). A survey of corporate governance. Journal of Finance, 52: 737–783

    Article  Google Scholar 

  • Stone M, Rasp J(1991). Tradeoffs in the choice between Logit and OLS for accounting choice studies. The Accounting Review, (1): 170–187

  • Vafeas N(1999). Board meeting frequency and firm performance. Journal of Financial Economics, 53: 113–142

    Google Scholar 

  • Weisbach M S(1988). Outside directors and CEO turnover. Journal of Financial Economies, 20: 431–460

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations


Corresponding author

Correspondence to Xinsheng Cheng.

Additional information

Translated and revised from Kuaiji yanjiu 会计研究 (Accounting Research), 2007, (3): 47–54

Rights and permissions

Reprints and permissions

About this article

Cite this article

Cheng, X., Ji, Y. & Wang, L. The impact of corporate governance on financial control. Front. Bus. Res. China 2, 385–396 (2008).

Download citation

  • Published:

  • Issue Date:

  • DOI: